CHAPTER 9

IMPLEMENTATION OF JUST-IN-TIME
(JIT) CONCEPT IN INDIAN INDUSTRIES
9.1 INTRODUCTION:
Just-in-Time (JIT) is one of the most sophisticated techniques which has wide reach¬
ing applications. This technique is widely implemented in various organisations
abroad. Until now the JIT ideal was just limited to the Western advanced coun¬
tries and Japan. But due to technical advancement and globalisation, today India
is also implementing this concept in various industries moving gradually from the
traditional inventory methods.
The word Just-in-Time (JIT) is synonymous with Toyota Production System
(TPS). After the successful implementation of JIT at Toyota, other industries in
the Western World implemented the concept of JIT. The onslought was more in the
automobile industries.
The case studies of the industries that have completely implemented JIT concepts
and those who have used some features of JIT to reduce the overall cost have been
presented in this chapter. A tabular form below represents brief summary of some
efforts made by some industries1.

No. Name of the Implementation Scheme Achievements

industry
1. Ba jaj Auto The company sloted its suppliers The company never ran
Ltd. into three categories and applied out of stock. The
different purchasing strategies to average inventories had
them. The inventories for LV class fallen down from 30
items (Rs. 1000 and above) were da vs in 1994 to 12 da vs
never for more than one shift. The today. The application
orders were placed weekly. IT of .11 I' helped the com¬
class items (between Rs.500 and pany to possess one of
Rs. 1 000) , ordering frequency was the most efficient pro¬
fortnightly, For ‘<T class items, or¬ curement systems.
dering freuency was monthly, but
the actual delivery policy was con¬
trolled through Kanban.

‘Source “Business Today The fortnightly magazine on c- business Seventh Anniversary Issue,
The Theory and Practice of Total Cost Management

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No. Name of the Implementation Scheme Achievements
industry
2. Asliok This is another leading automo¬ The ultimate result of
Leyland bile company of India. The com- adopting JIT was high
pany towered inventories help- productivity arid a lean
lessly which led to a setback in supply chain. The com¬
profit making. Then, Ashok Ley- pany thus saves Rs.8.50
land applied the concept of Just- crores per year.
in-i ime (JIT) on its shop floor
* t IV

under the project named ‘OS

CARS’. OSCARS stands for Op
Ionising Supply Chain and Ra¬
tionalising Sourcing. Under OS¬
CARS, the company classified the
various components into three cat¬
egories, ‘A B’ and ‘C' and de-
vised different’ delivery systems
aiming at cutting down inventory
holdings. Apart from this, Project
OSCARS started a pull based sys¬
tem on Ashok Leyland’s shopfioor,
where each stage produces only as
much as the next stage needs.
3. Samtel Colour Samtel relocated its vendors close Samlel achieved bof h
to its Ghaziabad plant. Thus, the production -cost
company’s most outsourced raw efficiency and produc¬
material are delivered twice a day. tion lead time efficiency.
Thus, the raw materials are sup¬ Down-time was brought
plied as and when required be¬ down from 5 percent in
cause of geographical proximity. 11)97 to less than l per¬
cent in September 1998
for 14- inch tube line.
1 hey also formed Sain
tel Quality Movement
Circles. On the wast age
front, the mid size line
has lowered the fig u re
from 7 percent in April
1997 to 4 per cent today.

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No. Name of the Implementation Scheme Achievements
industry
4. Escort I ’he company went in for Business Prior to reengineering
Tractors Process Reengineering (BPR). there were 21 workers in
The Farm Trac Division of Escorts any shift and had a lead
created four individual profit cen¬ time of 19 days. To-
tres and located them in each of day, the process requires
the buildings, instead of dispers- on ly 12 workers per shift
mg subassemblies across available and lead time has fallen
area. They extended their efforts down to 8 hours.
to Supply Chain Management and
in turn, reduced the number of
vendors.
5. W i pro Wipro Corporation implemented The company’s invento¬
Corporation the JIT technique to its firm. Jt ries shrunk from 15 days
cut its vendor base from 140 to 70 in 1992 to 3 days in
and concentrated on single sources 1998.
of supply. It developed its suppli¬
ers within a radius of 50 km.
6. Sundaram SBL concentrated on vendor- SBL ordered asbestos
B rake Linings buyer relationship- They deveb on a need-
(SBL) oped a structured sourcing system determined basis, cut
with John Manville Co. (JMC) ting costs significantly,
of Canada, Thus, both SBL and
JMC follow JIT schedule.
7. Hewlett Hewlett-Packard (HP) In- Hewlett Packard has
Packard (HP) dia wanted to reach its customers one of the most effi¬
India much faster than it could have cient procurement sys-
otherwise. It utilises warehouse terns which caters very
facilities of Airfreight Ltd. (AFL) good services to its
in different parts of the country. customers,
The warehouses (in Bangalore and
Mumbai) are connected also by V-
Sat to HP’sDelhi and Singapore
offices. Once an order is placed.
it immediately notifies the ware¬
house nearest to the customer,
which assembles the machine and
delivers it.

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 No. Name of the Implementation Scheme Achievements
industry
8. Blue Star Their refrigeration manufacturer This yielded better re-
t

was suffering from an average on- suits for the company

time delivery record of just 33 per and could now concen¬
cent. The plant was struggling trate on improving per¬
due to high inventories. Then formance of its supply-
it restructured through Supply chain.
Chain Management (SCM). An
initial audit revealed that just 10
percent of its 449 vendors ac¬
counted for 60 percent of busi¬
ness. The company then focussed
on those vendors who supply crit¬
ical components - which also de¬
manded downsizing the supplier
base. Thus, it reduced the number
of suppliers to 142 using a model
named ‘Mutual Vulnerability1.
9. P ri cewater PWC introduced a 2-bin system The plant Order- to-
House Coop toKanban on the shop floor for au¬ Delivery cycle time has
ers (PWC) tomatic replenishment of C-ciass dropped from 103 days
items such as rubber part, nuts to 34 days. The work-
and bolts, without piling up sky in-progress has dropped
reaching inventories. For this, on an average from 22
they have developed a software chillers to 6 chillers
which requisitions supplies from while on-time deliveries
vendors in right quantity and at start at 94 percent.
right time.

9.2 IMPLEMENTATION OF JIT IN BAJAJ AUTO LTD.

We discuss here the case study of Bajan Auto Ltd. who has fully implemented JIT
by using the concept of ABC/ Analysis.
Bajaj Auto slotted its suppliers into three categories and applied different ptir-
chasing strategies to each one of them. This enabled the company to retain its average
lead of between 10 and 15 percent over its competitors in the manufacture of its 2-
wheelers. The company had divided its 3,000 - and-odd components that go into
scooters into three categories - A’, ‘B’ and ‘C\ The first consisted of high value
(Rs.1000 and above) items; the second, medium value (between Rs.500 and Rs.1000);
and the third, low value (below Rs.500). This classification helped the managers to

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build inventories in inverse proportion to the average cost of each genere. Thus inven¬
tories for ‘A ‘-class items are never more than for one shift. Even then the company
did not run out of stock. This was only because of JIT. The orders were placed every
week and the daily deliveries were made. In order to ensure that the inventory-level is
kept at minimum, Bajaj Auto got rid of quality inspection of these products. Instead
it became mandatory for vendors to conform to its self-certification programme under
which they guarantee the quality of their output and feed their supplies directly to
the production line. 174 out of 1000 of its vendors fell in this category. Bajaj saved
on inventory pile-ups and quality based rejection. For B ’-class items, the ordering
frequency was once a fortnight, and the inventory-ceiling,. one week. For class
items, the ordering cycle was monthly, but the actual delivery was controlled by the
Kanban process. Under the Kanban system, the requirements for the production line
for a particular component are indicated visually through cards which the suppliers
use to deliver exactly as much as is required.
This was not enough just to cut down the costs. This would result in forcing the
suppliers to hold more inventories. Thus the vendors push away from the company.
Bajan Auto, hence communicates its tentative production-plan 3-mont.hs ahead ol
schedule, the semi-final is relayed to them 45-days ahead, and the final production
scheduel is frozen to 30 days in advance.
The overall impact of these strategies was that the average inventories had fallen
from 30 days in 1994 to 12 days today.

9.3 CASE STUDY OF ASHOK LEYLAND WHICH IM¬

PLEMENTED JIT
Ashok Leyland, another leading automobile industry in India, implemented JI T and
reached the targets of reduced inventory control and high level of productivity. Al¬
most 18 months ago. Ashok Leyland had to allow tower inventories helplessly. The
company’s profits had crashed from Its. 124.93 crores to a meagre Its. 18.-11 crores.
The company was fighting for its survival.
Then began Project OSCARS which stands for Optimising Supply Chain and
Rationalising Sourcing - aimed at vendor selection and development, better planning
and scheduling, and inventory control process. Until then the company was main¬
taining inventories worth 45 days, in comparison to 3 lo 5 days globally. This was
because the components were ordered by Ashok Leyland on the basis of an annual
production schedule which was going haywire.

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 Under the Project Oscar, the 5000-and-odd components which the company used
were categorised into ‘A!, ‘B’ and ‘C!. A items amounted to 75 percent of the total
cost of components, ‘B! items, 18 percent and ‘C’ items, 7 percent. Based on this
the company devised different delivery systems for each category, aimed at cutting
inventory holdings. For the supply of ‘ A class items, a JIT system was utilized. Under
this the plant sent a JIT card, specifying the part number, quantity and the unloading
location to the supplier, who promptly despatched the required consignment directly
to the assembly line. Project OSCAll devised a funnel-planning system, covering ()
weeks of requirements. The broadest part- stands for the tentative requirement of the 1
last two weeks out of the six (6). The middle part of the semifrozen requirement for
the middle 2 weeks and the narrowest, part and the frozen requirement for the first two
weeks. So the vendor knows roughly when to expect the JIT card. Simultaneously,
Project OSCARs started a pull-based system on Ashok Ley I and shopfloor, where
each stage produces only as much as the next stage needs. The ultimate result of
adopting JIT was high productivity and a lean supply chain. The company thus save
Rs.8.50 crores a year. There are many more companies which used JIT and other
related techniques like Business Process Re-engineering (BPR) to achieve the major
targets like elimination of waste, reduction in lead time, high level of flexibility etc.
Also one of the major factors that make JIT superior to the traditional techniques is
the geographical proximity of the single source of supply which is utilized by many
companies.
The case studies of some of the industries that implemented JIT and other related
ideals partially, in order to achieve the above mentioned factors are discussed below:

9.4 SAMTEL COLOUR USING THE BENEFIT OF GE¬

OGRAPHICAL PROXIMITY
Samlel Colour is the manufacturer of colour picture lubes. I hoy concentrated on
production cost efficiency and production lead time efficiency. In order to ephasize
on the former aspects, Samtel relocated its vendors close to its Ghaziabad plant.
Thus the company’s most out sourced raw material - electron guns and deflection
yokes are delivered twice a day. This implies that tlic materials are supplied as and
when required. This shows that Samtel has applied JI I technique to its supply policy.

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9.5 WIPRO ACHIEVED REDUCTION IN INVENTORIES
BY STICKING TO SINGLE SOURCE OF SUPPLY
Similarly, Wipro Corporation also achieved remarkable results by implementing JIT,
firstly, the dot-matrix printer division reduced its procurement costs by 50% by
curtailing its vendor base from 140 to TO and focussing on single source of supply as
much as possible. Also the unit developed its suppliers within a 50 km radius. Hence
V

the company’s inventories shrunk from 15 days in 1992 to 3 days in 1998.

9.6 SUNDARAM BRAKE LININGS USED THE VENDOR

BUYER RELATIONSHIP TO REDUCE COSTS
Sundaram Brake Linings (SBL) used the heart of supply chain management - the
supplier- vendor relationship. The closer and more dependent they are on each other
the better is the outcome. SBL used the principle of single sourcing to slice through
its bills for asbestos. Initially it bought from three different suppliers. This resulted
in increased transaction costs. So they changed their tact and developed a structured
sourcing system with John Manville Co. (JMC) of Canada. Now SBL provides
JMC with a 12-week requirement schedule which the latter meets by delivering every
Monday. Thus SBL saves on inventory pile-ups and enjoys the flexibility of changing
the combination of different kinds of asbestos upto 3 weeks before each shipment.
This would have been impossible and SBL negotiated with multiple sources of supply.
Looking at the vendor’s ability to match with its schedule, SBL ordered asbestos on
a need-determined basis thus cutting costs significantly.

9.7 CARD-SIGNALLING SYSTEM USED BY RANE

MADRAS
Ilane Madras is a steering gear manufacturing company where cellular lines riot only
increased throughout time, but also reduced the cycle time. At the core of it, they
used the card signalling system of Kanban and just-in-time inventory management.
To minimise, work-in-progress Rane employed a card signalling system. Every stage
in the process is an internal customer and parts are supplied only against demand.
However a minimum is maintained to prevent the stoppage of the line in case there
is a problem. Rane is now
helping its vendors to employ Kanban and eventually, it
will have a system where its nearby vendors will produce as per a Kanban coming
out from Rane’s shopfloor. The ultimate result of the implementation of JIT is
i that

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the inventory turnover for llano's raw materia 1 lias gone up by 30 percent and the
raw material inventory has come down to 5 days from 7 days in 1996.

9.8 ESCORT TRACTORS l JSED BPRTO REDUCE COSTS

Escort is a leading Tractor conmpany of India. iiy using B)’R a concept similar to
JI1, Escort reduced the cost per tractor by 20 per cent. Rear Axle unit targeted a
cost reduction of Rs.84.80 per unit. Willi the current output of 20,000 rear axles, it
amounts to a cut of Rs.lG.96 lakh s. The ultimate gains after implementing HER were
(i) 72.6 percent increase in productivity, (ii) increase in capacity by 12,868 tractors,
(iii) 100 percent conformance to schedule, (iv) 60 percent reduction in inventories.
(v) 50 percent reduction in manshift per tractor and (vi) 75 percent reduction in lead
time.
Some other applications may briefly be bihglighted also as under"*:

9.9 JINDAL VIJAYANAGAR STEEL

File company began the production of hot rolled and cold rolled steel colls at its new
plant. Then, the company took the responsibility of supplying at the time and place
specified by the buyer - on a JIT basis. The company uses a fleet of 50 hired Volvo
trucks, each of which has a capacity of carrying 60 tonnes. The trucks are run round
the clock, with drivers relieving one another every 8 hours, on different routes. This
enables shortest permissible delays.
The company estimates show that the travel time have slashed down drastically.
The travel Lime has been reduced by 50 percent.

9.10 FEDERAL EXPRESS

Compaq out. sources its logistics from Federal Express, The company’s long cycle
Lime was killing 30-40 days. The reason was multiple sourcing of components which
were assembled in a central warehouse in Europe. Phis was the reason for rise in
costs.
So Federal Express overhauled the system extensively, hi the new chain, the
assembled products are sent to its ori distribution centre directly from the factory
as
,md then sold to dealers on a cost-insurance freight basis . An e-mail track -and- trace

Business Today, ‘Leading at Logistics' (The Fortnightly magazine on e- Business) Feb

7-2 1 , 2000] 1 202

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 system covers the entire order-to-deliver spectrum. This has resulted in a significant
reduction in cycle time to 10 days,

9,11 CEAT TYRES

Ceat lyres* objective was to slash down inventories by implementing JIT. Their pro
duct ion and planning systems were not properly synchronized. The answer to this
was Logistic management1, Ceat set up six despatch centres. These were selected af-
ten plotting the locations of all the 125 selling points and keeping a 48 hours travelling
tune. With this all that was needed was to replenish stocks anywhere in the country,
Thus Ceat could scale down its inventory of finished products. They have also set
up an infolech infrastructure such that the despatch centres could communicate their
requirements to the plants on a JIT basis*
Thus3 we have made a humble attempt to highlight the industries which have
extensively applied JIT system and have acquired the benefits to a great extent. But
this is just a begining of JIT application for Indian Industries to become more com-
petitive and thereby to achieve not only profit and progress but also for establishing
dominance in the global market.

3
Source: The 7th Business Today Anniversary Issue - "The Theory and Practice of Total Cost
Management'1 dated Jan, 7, 1999.

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